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Printablesubyduby said: Gold is no longer used as a standard, and yet it has the most stable store of value of all commodities. So by watching the DOLLAR price of gold move around, it's not gold that's changing in price, it's the value of the dollar--it's a little counter-intuitive, but it's true.
Sure...
please clarify on this explaination more. Say Gold is $35/oz. as it once was when the dollar was on a gold standard. One ounce of gold is worth $35. BUT...that's the same thing as saying that 1$ is worth 1/35th oz. of gold. Both were money once, it was merely the exchange ratio from one to the other. If the government decideded on day to print twice as much money, then all of a sudden there would be twice as many dollars and the price of gold would shoot up to $70/oz. to compensate, because while you can print worthless paper out of thin air, you can't magically double the amount of gold in circulation. The price gold will rise until equilibrium is achieved. During the 70's, the amount of dollars printed skyrocketed, and the price of gold rose to nearly $800/oz at it's peak, until they began deflating dollars, and now the price of gold is about $315...and it's been around $350 for the last 20 years or so--IN DOLLARS. The point is, no government can fake out gold, they can only fake out their paper money. If gold is more expensive, the paper is worth less because it takes that much more paper to buy the gold! Fear is the mind-killer. | |
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Erendira said: This one is hard to explain, too. The value of the dollar has nothing to be backed upon (not gold or silver). The value of the dollar is placed within the people. We determine what a dollar is worth by the ways we use it. A long time ago, (lol, I don't know when, maybe 1930s, whenever the Gold Standard was around) gold and/or silver was used to back the value of money. Gold and silver determined how much a dollar was worth. I don't remember why the US decided not to use the Gold Standard anymore to hold the value of money, (maybe because people were hoarding it) but I think it was a wise decision. So, the comment above is saying that even though the value (determined by price) of gold may seem to be fluctuating, it is actually the dollar's value that is fluctuating which may cause one to think the value of gold is changing a lot more than it really is. Hope that's right. What makes gold so stable is this: The supply is ENORMOUS relative to it's FLOW. That is, it only grows about 2% per year as it is mined, whereas wheat spoils and silver is easy to find in large quantities. The amount of Gold is nearly constant, and therefore the price doesn't wobble around very much.
Money is worthless unless it is backed by some kind of confidence. It doesn't HAVE to be backed by gold, but it helps to stababalize the value--stability is what counts--the dollar you borrow today is worth the same as what you have to pay back tomorrow, etc. FYI, we went off the gold standard in 1971, and endured 10 years of horrible inflation as a result, until the central banks figured out a way to stabalize the dollar accurately. Fear is the mind-killer. | |
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wellbeyond said: Isn't that a little like saying "Baseball is only boring if you don't follow any of the teams"??..lol If that's the case, then baseball is boring...heh.. Good point...I guess I think it's special because it's about money, which is something I want a lot of.   Fear is the mind-killer. | |
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 Teller, MrChristian & Erendira
Thanks for taking the time to explain it! 
LadyCabDriver
Thanks for asking the question, I needed to know this stuff too!!    I never met you, but I LOVE you & I will forever!! Thank you for being YOU - my little Princey, the best to EVER do it | |
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BUY BUY BUY BUY BUY BUY BUY BUY BUY..!!!
there is a war coming.. did ya notice the more the threat is taken seriously the higher the dow ends..?? war is good for economy.. any fuckin stupid republican sinking in the ratings knows this | |
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DORA said: BUY BUY BUY BUY BUY BUY BUY BUY BUY..!!!
War is bad for the economy:
there is a war coming.. did ya notice the more the threat is taken seriously the higher the dow ends..?? war is good for economy.. any fuckin stupid republican sinking in the ratings knows this http://www.prince.org/msg...&tid=25490 Fear is the mind-killer. | |
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